Capital Structure Decisions

Abstract

Capital structure practices/decisions assume vital significance in corporate financial management as they influence both return and risk of equity owners of corporate enterprises. Whereas excessive use of debt may endanger their very survival, a conservative policy deprives them of its advantages to magnify the equity rates of return. The objective of this chapter is to have an in-depth examination of the capital structure/financing decision practices pursued by the sample companies.

As far as designing of capital structure is concerned, the study brings to fore that debt (which was the most important constituent of corporate financing during pre-economic liberalisation period) is steadily being replaced by equity by the majority of the sample companies in India. This is an aspect that is corroborated as well, from the steadily declining debt–equity ratios over the past two decades brought forth by the earlier studies.

The sample companies (having profitable operations) in view of large internal cash accruals at their disposal to meet their investment requirements are using less amount of debt as external financing requirement not because they have low target debt ratios but because of preference for internally generated funds. This flouts sound tenets of finance theory. Such firms, due to favourable financial leverage, could have magnified their RoR (rate of return) for their equity owners by employing higher debt. In other words, it is reasonable to conclude that the tax shield on interest is now being treated as a secondary consideration in designing capital structure.

Another notable finding of the study is that there seems to be a significant portion of short-term debt in the total debt. Reliance on short-term debt to such a marked extent in preference to long-term debt is again not in conformity with sound tenets of finance theory as it causes grave risk, at least, in terms of its non-renewal and interest rate fluctuations. Therefore, there is need for substitution of short-term debt with long-term sources, in particular, when the requirements are permanent in nature.

It is also pertinent to emphasise here that the development/public financial institutions (DFIs/PFIs) constituted the backbone of the Indian financial system until 2000; however, their relative significance in the emerging financial scenario had been declining, indicating a shift in corporate financing in India, in terms of greater reliance of industry on non-institutional sources of finance and greater recourse to the capital market.

Yet another notable finding of the study is that the sample companies seem to be comfortable with the servicing of debt in terms of both payment of interest and repayment of principal. It is pertinent to note here that this level of comfort could also be brought about by the steadily declining proportion of debt in the capital structure of such companies (over the past two decades). Further, companies are even able to meet their total external obligations comfortably indicating sound earning capacity. Given the fact that the companies raise funds (externally) to meet their financial needs, they are, perforce, to have sound fundamentals in terms of reasonable/low risk and so on. It is satisfying to note, then, that they have low operating and financial risk (as per operating and financial leverage).

A matter of concern is the finding of a low component of secured loans to total borrowings. These large sample companies with substantial assets base should be able to raise finance from secured loans as it will relatively (probably) be the cheaper source of finance compared to other borrowings. Hence, there is untapped opportunity of lowering cost of capital by having relatively lower cost of debt.

Another important finding is that the sample companies show non-adherence to the pecking order hypothesis (in its entirety). This could perhaps be due to the robust capital markets in the country making it easier for the companies to raise equity. This further strengthens our contention that equity for aspects like signalling theory and reduction in agency costs is finding favour with the sample companies over the traditional model of debt being utilised first and equity finance only being raised as the last resort (under the pecking order hypothesis).

Paired samples t-test of constituent sectors of the sample companies based on debt–equity ratio over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 and Phase 4

t

df

Significance (2-tailed)

ICT

2.094

17

0.052

Healthcare

1.713

13

0.110

Diversified

1.262

8

0.242

Miscellaneous

−0.870

14

0.399

Metals

0.770

16

0.452

Power

−0.756

13

0.463

Transport

−0.714

16

0.486

Oil and gas

−0.626

15

0.541

Housing

−0.451

17

0.658

FMCG

0.368

10

0.721

Capital goods

−0.326

12

0.750

Appendix 3.3: ANOVA of the consolidated sample and the constituent sectors of the sample companies based on debt–equity ratio over phase 1 (2001–2006) and phase 2 (2007–2011) and phase 3 (2007–2008) and phase 4 (2009–2011)

Paired samples t-test of constituent sectors of the sample companies based on short-­term obligations–equity ratio over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 and Phase 4

t

df

Significance (2-tailed)

ICT

2.036

17

0.058

Healthcare

1.918

13

0.077

FMCG

1.330

11

0.211

Housing

−0.972

17

0.345

Diversified

0.837

8

0.427

Metals

−0.624

17

0.541

Oil and gas

−0.581

15

0.570

Power

0.175

13

0.864

Miscellaneous

−0.103

14

0.920

Transport

0.041

16

0.968

Capital goods

−0.036

12

0.972

Appendix 3.9: ANOVA of the consolidated sample and the constituent sectors of the sample companies based on short-term obligations–equity ratio over phase 1 (2001–2006) and phase 2 (2007–2011), phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 1 and Phase 2

Phase 3 and Phase 4

F

Significance

F

Significance

Consolidated

2.407

0.009

2.726

0.003

Housing

6.389

0.016

0.334

0.567

Miscellaneous

1.996

0.168

0.000

0.987

Healthcare

1.745

0.198

1.450

0.239

Power

1.358

0.255

0.003

0.954

Metals

0.667

0.420

0.171

0.682

Transport

0.658

0.423

0.014

0.906

ICT

0.391

0.536

2.274

0.141

Capital goods

0.347

0.561

0.000

0.987

Diversified

0.264

0.614

0.234

0.635

FMCG

0.096

0.760

0.462

0.504

Oil and gas

0.000

0.990

0.061

0.807

Appendix 3.10: Mean, median and quartile values of total debt to total assets (d/a) ratio of constituent sectors of the sample companies over phase 1 (2001–2006) and phase 2 (2007–2011)

Sector

Phase 1 (2001–2006)

Phase 2 (2007–2011)

Mean

Median

Quartile 1

Quartile 3

Mean

Median

Quartile 1

Quartile 3

Housing

64.33

74.83

50.33

86.00

52.49

57.47

35.88

66.85

Oil and gas

63.09

71.01

51.85

81.39

48.21

52.35

22.95

71.23

Miscellaneous

62.67

70.00

54.50

79.50

64.80

69.04

52.75

81.48

Transport

59.17

64.00

45.33

75.33

55.70

55.23

43.54

72.30

Capital goods

57.33

58.83

45.83

72.17

62.12

60.95

51.60

73.16

Healthcare

55.67

57.33

47.17

67.50

45.78

45.84

30.88

58.81

Power

55.14

49.74

38.09

80.97

53.48

49.07

36.20

75.30

Metals

53.33

51.67

36.83

70.83

55.96

60.24

40.89

75.60

Diversified

47.18

46.87

36.06

57.38

42.21

38.39

26.57

54.05

FMCG

47.17

42.17

30.17

64.33

51.64

53.36

39.05

66.94

ICT

46.83

50.50

21.50

68.33

53.82

55.57

37.03

70.43

Paired samples t-test of constituent sectors of the sample companies based on total debt to total assets (D/A) ratio over phase 1 (2001–2006) and phase 2 (2007–2011)

Sector

Phase 1 and Phase 2

t

df

Significance (2-tailed)

Healthcare

2.686

12

0.020

Housing

1.892

13

0.081

ICT

−1.686

14

0.114

Diversified

1.283

7

0.240

Transport

1.208

15

0.246

Oil and gas

1.124

9

0.290

Power

−0.530

11

0.607

Metals

0.390

15

0.702

Capital goods

0.274

6

0.793

FMCG

0.219

6

0.834

Miscellaneous

−0.058

14

0.955

Appendix 3.11: Mean, median and quartile values of total debt to total assets (d/a) ratio of constituent sectors of the sample companies over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 (2007–2008)

Phase 4 (2009–2011)

Mean

Median

Quartile 1

Quartile 3

Mean

Median

Quartile 1

Quartile 3

Miscellaneous

65.50

69.50

52.50

83.00

64.33

68.73

52.92

80.46

Capital goods

62.50

64.50

52.00

73.00

61.87

58.59

51.34

73.27

Transport

60.00

62.50

49.00

73.00

52.83

50.38

39.90

71.84

Metals

59.50

61.50

50.50

75.00

53.59

59.40

34.49

75.99

ICT

59.00

62.50

36.50

78.00

50.37

50.95

37.38

65.39

Housing

53.00

58.50

38.50

68.00

52.16

56.78

34.14

66.08

Power

52.83

44.82

35.72

74.68

53.92

51.91

36.52

75.71

Healthcare

49.00

49.50

32.00

65.00

43.63

43.39

30.13

54.69

Oil and gas

47.29

48.81

17.46

71.30

48.83

54.71

26.62

71.19

Diversified

45.68

45.82

36.03

51.20

39.90

33.44

20.27

55.96

FMCG

45.50

45.50

26.50

65.00

55.73

58.60

47.41

68.23

Paired samples t-test of constituent sectors of the sample companies based on total debt to total assets (D/A) ratio over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 and Phase 4

t

df

Significance (2-tailed)

ICT

2.324

12

0.038

Transport

1.646

13

0.124

Metals

1.524

16

0.147

Capital goods

1.295

6

0.243

Diversified

1.235

6

0.263

Healthcare

0.892

10

0.393

Oil and gas

−0.826

11

0.426

FMCG

−0.527

5

0.621

Housing

0.196

16

0.847

Power

−0.168

12

0.870

Miscellaneous

−0.149

13

0.884

Appendix 3.12: ANOVA of the consolidated sample and the constituent sectors of the sample companies based on total debt to total assets (d/a) ratio over phase 1 (2001–2006) and phase 2 (2007–2011) and phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 1 and Phase 2

Phase 3 and Phase 4

F

Significance

F

Significance

Healthcare

3.753

0.065

0.351

0.560

Consolidated

1.543

0.124

1.917

0.043

Housing

1.450

0.238

0.005

0.942

Oil and gas

1.426

0.244

0.067

0.798

Diversified

0.527

0.479

0.262

0.617

ICT

0.469

0.499

0.935

0.342

Transport

0.367

0.549

0.925

0.344

Metals

0.149

0.702

0.458

0.504

FMCG

0.124

0.729

1.037

0.326

Capital goods

0.043

0.839

0.166

0.690

Power

0.021

0.887

0.066

0.799

Miscellaneous

0.009

0.924

0.001

0.970

Appendix 3.13: Mean, median and quartile values of long-term debt to total assets (d/a) ratio of constituent sectors of the sample companies over phase 1 (2001–2006) and phase 2 (2007–2011)

Sector

Phase 1 (2001–2006)

Phase 2 (2007–2011)

Mean

Median

Quartile 1

Quartile 3

Mean

Median

Quartile 1

Quartile 3

Housing

40.17

42.33

27.00

56.33

30.96

28.66

14.03

46.95

Metals

34.50

32.17

16.67

48.83

34.97

32.66

19.00

49.66

Transport

32.41

33.32

9.36

47.36

28.03

29.64

5.01

46.40

Power

32.36

26.68

8.08

53.37

26.16

29.43

3.18

41.15

Miscellaneous

31.53

31.25

12.53

46.95

30.70

31.73

12.81

48.80

Oil and gas

30.40

31.42

7.72

43.39

28.42

28.03

3.52

47.81

Diversified

25.69

25.23

17.11

36.60

25.79

24.83

7.13

34.44

ICT

23.92

16.67

0.64

39.91

27.84

26.70

7.74

41.99

Healthcare

22.50

22.67

4.83

33.67

17.91

12.42

4.12

27.71

Capital goods

19.01

15.40

3.79

31.88

18.22

14.02

1.51

31.81

FMCG

19.00

13.17

1.67

30.50

21.24

15.27

2.03

39.46

Paired samples t-test of constituent sectors of the sample companies based on long-term debt to total assets (D/A) ratio over phase 1 (2001–2006) and phase 2 (2007–2011)

Sector

Phase 1 and Phase 2

t

df

Significance (2-tailed)

Housing

2.723

16

0.015

Transport

1.737

16

0.102

Healthcare

1.697

13

0.114

ICT

−1.019

17

0.322

Power

0.710

12

0.491

FMCG

0.502

11

0.625

Metals

0.495

17

0.627

Capital goods

0.392

12

0.702

Miscellaneous

0.304

15

0.766

Oil and gas

0.275

14

0.788

Diversified

−0.008

8

0.994

Appendix 3.14: Mean, median and quartile values of long-term debt to total assets (d/a) ratio of constituent sectors of the sample companies over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 (2007–2008)

Phase 4 (2009–2011)

Mean

Median

Quartile 1

Quartile 3

Mean

Median

Quartile 1

Quartile 3

Metals

38.00

34.50

23.00

54.00

32.95

31.44

16.33

46.77

Housing

32.00

29.50

14.00

48.00

30.27

28.10

14.05

46.24

ICT

28.27

28.12

2.27

47.06

27.55

25.75

11.38

38.61

Miscellaneous

28.04

30.81

11.49

41.32

32.48

32.35

13.68

53.79

Diversified

27.52

23.91

8.59

35.60

24.64

25.44

6.15

33.67

Oil and gas

27.38

27.69

0.49

48.03

29.11

28.26

5.55

47.66

Transport

27.10

30.96

4.63

44.16

28.65

28.75

5.27

47.90

Power

25.66

28.09

1.40

41.72

26.50

30.33

4.37

40.76

FMCG

24.00

17.00

3.00

44.00

19.39

14.11

1.39

36.43

Healthcare

19.50

13.00

7.00

27.50

16.84

12.03

2.21

27.86

Capital goods

17.41

16.54

0.88

26.44

18.77

12.34

1.92

35.38

Paired samples t-test of constituent sectors of the sample companies based on long-term debt to total assets (D/A) ratio over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 and Phase 4

t

df

Significance (2-tailed)

Healthcare

1.459

12

0.170

Miscellaneous

−1.211

15

0.244

FMCG

1.020

11

0.330

Metals

0.906

16

0.378

Housing

0.897

17

0.382

Oil and gas

−0.469

15

0.646

ICT

0.438

17

0.667

Power

−0.361

13

0.724

Diversified

0.337

8

0.745

Capital goods

0.079

12

0.939

Transport

−0.004

16

0.997

Appendix 3.15: ANOVA of the consolidated sample and the constituent sectors of the sample companies based on long-term debt to total assets (d/a) ratio over phase 1 (2001–2006) and phase 2 (2007–2011) and phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 1 and Phase 2

Phase 3 and Phase 4

F

Significance

F

Significance

Consolidated

2.702

0.003

2.193

0.018

Housing

3.153

0.085

0.097

0.757

Transport

0.632

0.432

0.013

0.911

ICT

0.530

0.472

0.043

0.837

Power

0.483

0.494

0.026

0.872

Healthcare

0.445

0.510

0.299

0.589

Oil and gas

0.118

0.733

0.018

0.896

Capital goods

0.103

0.751

0.003

0.957

Metals

0.085

0.772

0.475

0.496

FMCG

0.035

0.854

0.281

0.601

Miscellaneous

0.029

0.866

0.244

0.625

Diversified

0.000

0.996

0.015

0.903

Appendix 3.16: Mean, median and quartile values of relative share of secured loans to total borrowings of constituent sectors of the sample companies over phase 1 (2001–2006) and phase 2 (2007–2011)

Sector

Phase 1 (2001–2006)

Phase 2 (2007–2011)

Mean

Median

Quartile 1

Quartile 3

Mean

Median

Quartile 1

Quartile 3

Diversified

72.89

76.46

59.41

88.73

52.10

57.82

30.56

74.60

Miscellaneous

72.27

78.41

54.00

91.35

70.72

77.55

59.06

91.26

Housing

68.78

77.76

55.79

90.15

65.35

67.30

51.50

88.39

ICT

68.49

69.92

46.36

97.55

53.58

65.42

15.81

86.81

Metals

65.55

77.01

48.64

90.70

55.76

63.94

33.13

83.90

Power

64.71

78.14

36.11

93.92

58.06

65.98

27.89

87.28

Capital goods

62.05

72.24

39.62

87.26

51.98

59.54

15.02

84.85

Oil and gas

62.02

68.10

35.09

94.21

51.74

52.43

14.52

91.25

Transport

59.22

65.82

36.57

88.79

46.27

44.54

14.09

79.23

FMCG

57.32

60.44

33.38

83.62

44.70

34.82

13.22

75.75

Healthcare

56.51

61.59

33.32

79.89

40.21

34.70

4.44

74.42

Paired samples t-test of constituent sectors of the sample companies based on relative share of secured loans to total borrowings over phase 1 (2001–2006) and phase 2 (2007–2011)

Sector

Phase 1 and Phase 2

t

df

Significance (2-tailed)

Transport

3.722

14

0.002

Healthcare

3.051

12

0.010

Diversified

1.988

8

0.082

Metals

1.759

16

0.098

ICT

1.559

15

0.140

FMCG

1.494

10

0.166

Oil and gas

1.338

12

0.206

Capital goods

1.034

12

0.321

Miscellaneous

0.472

14

0.644

Power

−0.423

11

0.681

Housing

−0.218

16

0.830

Appendix 3.17: Mean, median and quartile values of relative share of secured loans to total borrowings of constituent sectors of the sample companies over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 (2007–2008)

Phase 4 (2009–2011)

Mean

Median

Quartile 1

Quartile 3

Mean

Median

Quartile 1

Quartile 3

Miscellaneous

68.08

72.36

62.85

86.29

72.48

81.02

56.53

94.58

Housing

59.29

61.80

45.16

82.77

69.40

70.97

55.73

92.14

ICT

58.67

72.67

18.28

96.48

50.19

60.59

14.17

80.37

Metals

56.43

61.26

34.46

91.07

55.32

65.73

32.25

79.11

Power

53.32

56.45

22.49

84.90

61.22

72.34

31.49

88.87

Diversified

52.22

62.28

28.60

75.94

52.03

54.84

31.87

73.70

Capital goods

50.93

53.81

12.31

84.93

52.68

63.36

16.82

84.80

Oil and gas

49.02

42.71

12.01

87.83

53.55

58.92

16.20

93.52

Transport

48.26

45.20

17.81

82.50

44.95

44.10

11.61

77.06

FMCG

47.96

36.29

24.91

73.66

42.54

33.84

5.43

77.15

Healthcare

37.76

28.82

4.24

72.14

41.84

38.62

4.58

75.94

Paired samples t-test of constituent sectors of the sample companies based on relative share of secured loans to total borrowings over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 and Phase 4

t

df

Significance (2-tailed)

Housing

−2.384

16

0.030

ICT

1.069

15

0.302

Power

−0.956

12

0.358

FMCG

0.685

10

0.509

Oil and gas

−0.628

11

0.543

Miscellaneous

−0.576

13

0.575

Transport

0.431

15

0.673

Healthcare

−0.346

12

0.736

Diversified

−0.344

8

0.740

Metals

0.167

17

0.870

Capital goods

0.026

12

0.979

Appendix 3.18: ANOVA of the consolidated sample and the constituent sectors of the sample companies based on relative share of secured loans to total borrowings over phase 1 (2001–2006) and phase 2 (2007–2011) and phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 1 and Phase 2

Phase 3 and Phase 4

F

Significance

F

Significance

Diversified

3.571

0.077

0.075

0.788

Consolidated

1.699

0.080

2.207

0.017

ICT

3.135

0.086

0.316

0.578

Healthcare

1.851

0.186

0.005

0.944

Transport

1.502

0.230

0.055

0.816

Metals

1.488

0.231

0.010

0.922

Oil and gas

1.264

0.271

0.021

0.886

FMCG

1.170

0.292

0.179

0.676

Capital goods

0.951

0.339

0.000

0.995

Miscellaneous

0.067

0.797

0.344

0.562

Housing

0.022

0.884

1.383

0.248

Power

0.010

0.922

0.351

0.559

Appendix 3.19: Mean, median and quartile values of relative share of bank borrowings to total borrowings of constituent sectors of the sample companies over phase 1 (2001–2006) and phase 2 (2007–2011)

Sector

Phase 1 (2001–2006)

Phase 2 (2007–2011)

Mean

Median

Quartile 1

Quartile 3

Mean

Median

Quartile 1

Quartile 3

Oil and gas

36.94

36.76

6.18

63.38

49.76

57.05

23.82

77.10

Metals

27.21

20.14

5.27

38.27

43.71

43.82

12.02

72.65

Diversified

26.68

22.39

6.61

41.05

50.64

55.42

26.88

77.19

Miscellaneous

26.45

21.00

3.64

42.12

39.48

41.64

9.95

63.93

Power

25.34

15.26

1.88

37.10

34.32

35.41

4.37

56.26

Housing

24.48

20.32

10.96

34.00

40.90

42.40

21.02

59.23

ICT

24.15

10.69

1.88

33.91

33.07

25.65

1.79

52.43

Transport

20.29

10.93

0.00

32.94

33.73

20.99

0.46

66.58

Healthcare

19.15

14.26

0.39

28.03

40.35

37.07

9.28

66.69

FMCG

18.91

10.65

0.86

29.02

43.85

44.02

22.31

66.04

Capital goods

14.03

8.22

0.00

22.87

38.00

31.00

0.00

69.24

Paired samples t-test of constituent sectors of the sample companies based on relative share of bank borrowings to total borrowings over phase 1 (2001–2006) and phase 2 (2007–2011)

Sector

Phase 1 and Phase 2

t

df

Significance (2-tailed)

Capital goods

−3.455

12

0.005

Housing

−3.230

16

0.005

FMCG

−3.513

10

0.006

Healthcare

−3.333

12

0.006

Miscellaneous

−2.517

13

0.026

ICT

−2.365

15

0.032

Diversified

−2.556

8

0.034

Metals

−2.137

16

0.048

Transport

−1.910

15

0.075

Oil and gas

−1.692

13

0.114

Power

−0.881

11

0.397

Appendix 3.20: Mean, median and quartile values of relative share of bank borrowings to total borrowings of constituent sectors of the sample companies over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 (2007–2008)

Phase 4 (2009–2011)

Mean

Median

Quartile 1

Quartile 3

Mean

Median

Quartile 1

Quartile 3

Oil and gas

60.62

69.74

49.80

81.81

42.52

48.59

6.50

73.97

FMCG

50.02

55.25

32.75

70.20

39.74

36.54

15.35

63.26

Diversified

48.27

60.49

16.41

70.36

50.85

47.24

32.52

78.38

Housing

44.80

47.06

26.03

66.12

38.31

39.29

17.68

54.64

Metals

41.93

34.89

13.16

75.48

44.90

49.78

11.26

70.77

Healthcare

41.51

42.58

5.01

65.59

39.34

33.27

11.47

68.72

Miscellaneous

40.83

45.38

7.44

65.01

38.58

39.15

11.62

63.21

Capital goods

38.35

33.04

0.00

69.55

37.76

29.65

0.00

69.03

Transport

34.12

27.68

1.16

61.52

33.47

16.53

0.00

69.95

ICT

28.15

13.66

0.35

44.87

36.34

33.64

2.76

57.47

Power

27.55

24.14

0.00

47.17

38.84

42.92

7.28

62.31

Paired samples t-test of constituent sectors of the sample companies based on relative share of bank borrowings to total borrowings over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 and Phase 4

t

df

Significance (2-tailed)

Oil and gas

2.329

11

0.040

Power

−2.037

12

0.064

ICT

−1.579

15

0.135

FMCG

1.234

10

0.245

Housing

1.038

16

0.315

Metals

−0.617

17

0.545

Healthcare

0.554

12

0.589

Diversified

−0.458

8

0.659

Miscellaneous

0.309

13

0.762

Transport

−0.085

15

0.933

Capital goods

−0.047

12

0.963

Appendix 3.21: ANOVA of the consolidated sample and the constituent sectors of the sample companies based on relative share of bank borrowings to total borrowings over phase 1 (2001–2006) and phase 2 (2007–2011) and phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 1 and Phase 2

Phase 3 and Phase 4

F

Significance

F

Significance

Capital goods

6.831

0.015

0.000

0.984

FMCG

5.591

0.028

0.453

0.509

Housing

5.044

0.032

0.993

0.326

Healthcare

4.781

0.038

0.069

0.795

Diversified

4.781

0.044

0.132

0.721

Metals

3.868

0.058

0.097

0.758

Oil and gas

2.711

0.111

2.148

0.155

Miscellaneous

1.821

0.188

0.038

0.846

Power

1.701

0.205

2.038

0.166

ICT

1.639

0.210

0.699

0.409

Transport

1.255

0.271

0.003

0.953

Consolidated

0.980

0.460

1.114

0.351

Appendix 3.22: Mean, median and quartile values of relative share of financial institution borrowings to total borrowings of constituent sectors of the sample companies over phase 1 (2001–2006) and phase 2 (2007–2011)

Sector

Phase 1 (2001–2006)

Phase 2 (2007–2011)

Mean

Median

Quartile 1

Quartile 3

Mean

Median

Quartile 1

Quartile 3

Transport

14.52

1.37

0.00

16.79

0.72

0.00

0.00

0.00

Metals

12.81

0.93

0.00

13.98

11.64

0.01

0.00

2.18

Power

11.25

4.82

0.00

14.88

4.61

0.87

0.00

2.86

ICT

9.25

0.70

0.00

7.68

3.63

0.00

0.00

0.18

Oil and gas

8.13

0.00

0.00

6.58

5.31

0.00

0.00

7.41

Housing

7.85

2.36

0.05

9.12

3.37

0.15

0.00

3.69

Miscellaneous

7.61

1.22

0.35

7.65

7.51

2.79

0.00

6.37

Healthcare

6.89

3.58

0.37

7.92

0.00

0.00

0.00

0.00

FMCG

4.85

0.05

0.00

3.86

1.83

0.00

0.00

1.64

Diversified

4.32

0.10

0.00

3.11

5.36

0.00

0.00

0.00

Capital goods

2.37

0.66

0.00

1.91

0.36

0.00

0.00

0.00

Paired samples t-test of constituent sectors of the sample companies based on relative share of financial institution borrowings to total borrowings over phase 1 (2001–2006) and phase 2 (2007–2011)

Sector

Phase 1 and Phase 2

t

df

Significance (2-tailed)

Healthcare

2.654

12

0.021

Capital goods

2.559

12

0.025

Transport

2.087

15

0.054

ICT

1.776

15

0.096

FMCG

1.751

10

0.111

Oil and gas

1.567

13

0.141

Power

1.570

11

0.145

Housing

1.512

16

0.150

Diversified

−0.327

8

0.752

Metals

0.216

16

0.832

Miscellaneous

0.090

14

0.929

Appendix 3.23: Mean, median and quartile values of relative share of financial institution borrowings to total borrowings of constituent sectors of the sample companies over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 (2007–2008)

Phase 4 (2009–2011)

Mean

Median

Quartile 1

Quartile 3

Mean

Median

Quartile 1

Quartile 3

Metals

14.03

0.04

0.00

4.71

10.04

0.00

0.00

0.50

Miscellaneous

9.51

6.98

0.00

11.71

6.18

0.00

0.00

2.81

Oil and gas

6.15

0.00

0.00

7.07

4.75

0.00

0.00

7.64

ICT

4.62

0.00

0.00

0.13

2.97

0.00

0.00

0.21

Housing

4.44

0.38

0.00

5.56

2.67

0.00

0.00

2.44

Diversified

3.59

0.00

0.00

0.00

6.55

0.00

0.00

0.00

FMCG

3.30

0.00

0.00

4.10

0.86

0.00

0.00

0.00

Power

3.20

0.00

0.00

0.00

5.56

1.45

0.00

4.76

Capital goods

0.89

0.00

0.00

0.00

0.29

0.00

0.00

0.00

Transport

0.50

0.00

0.00

0.00

0.86

0.00

0.00

0.00

Healthcare

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Paired samples t-test of constituent sectors of the sample companies based on relative share of financial institution borrowings to total borrowings over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 and Phase 4

t

df

Significance (2-tailed)

FMCG

1.751

10

0.111

Metals

1.524

17

0.146

Housing

1.249

16

0.230

ICT

1.069

15

0.302

Miscellaneous

1.062

13

0.308

Capital goods

1.000

12

0.337

Healthcare

1.000

12

0.337

Diversified

−1.000

8

0.347

Power

−0.931

12

0.370

Transport

−0.521

15

0.610

Oil and gas

0.446

11

0.664

Appendix 3.24: ANOVA of the consolidated sample and the constituent sectors of the sample companies based on relative share of financial institution borrowings to total borrowings over phase 1 (2001–2006) and phase 2 (2007–2011) and phase 3 (2007–2008) and phase (4 2009–2011)

Appendix 3.27: ANOVA of the consolidated sample and the constituent sectors of the sample companies based on operating leverage over phase 1 (2001–2006) and phase 2 (2007–2011) and phase 3 (2007–2008) and phase 4 (2009–2011)

Paired samples t-test of constituent sectors of the sample companies based on ­financial leverage over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 and Phase 4

t

df

Significance (2-tailed)

Transport

−2.287

16

0.036

Healthcare

−2.079

12

0.060

Metals

−1.165

14

0.264

Capital goods

−0.985

10

0.348

FMCG

−0.656

10

0.527

Housing

0.525

14

0.608

Power

0.486

10

0.637

Miscellaneous

−0.066

11

0.948

Diversified

−0.057

8

0.956

ICT

−0.027

16

0.979

Oil and gas

−0.020

10

0.985

Appendix 3.30: ANOVA of the consolidated sample and the constituent sectors of the sample companies based on financial leverage over phase 1 (2001–2006) and phase 2 (2007–2011) and phase 3 (2007–2008) and phase 4 (2009–2011)

Paired samples t-test of constituent sectors of the sample companies based on combined leverage over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 and Phase 4

t

df

Significance (2-tailed)

Power

1.631

10

0.134

Oil and gas

1.344

10

0.209

Healthcare

1.073

10

0.309

Housing

−0.912

11

0.381

Miscellaneous

−0.867

8

0.411

Capital goods

−0.787

8

0.454

Diversified

−0.801

5

0.459

Metals

0.778

8

0.459

FMCG

0.762

8

0.468

ICT

0.567

9

0.585

Transport

−0.022

13

0.983

Appendix 3.33: ANOVA of the consolidated sample and the constituent sectors of the sample companies based on combined leverage over phase 1 (2001–2006) and phase 2 (2007–2011) and phase 3 (2007–2008) and phase 4 (2009–2011)

Paired samples t-test of constituent sectors of the sample companies based on debt service coverage ratio over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 and Phase 4

t

df

Significance (2-tailed)

Housing

3.218

16

0.005

Diversified

−0.426

7

0.0683

Capital goods

2.858

2

0.104

Transport

1.256

12

0.233

Healthcare

0.875

8

0.407

Miscellaneous

0.820

10

0.431

ICT

0.652

9

0.531

FMCG

−0.624

6

0.556

Power

0.514

9

0.619

Oil and gas

0.486

10

0.637

Metals

0.382

12

0.709

Appendix 3.36: ANOVA of the consolidated sample and the constituent sectors of the sample companies based on debt service coverage ratio over phase 1 (2001–2006) and phase 2 (2007–2011) and phase 3 (2007–2008) and phase 4 (2009–2011)

Paired samples t-test of constituent sectors of the sample companies based on interest coverage ratio over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 and Phase 4

t

df

Significance (2-tailed)

Healthcare

9.605

3

0.002

Metals

2.228

9

0.053

FMCG

2.706

4

0.054

Miscellaneous

1.584

10

0.144

Oil and gas

1.588

8

0.151

Transport

1.563

4

0.193

Housing

1.366

11

0.199

Power

1.072

8

0.315

ICT

0.499

3

0.652

Diversified

0.242

5

0.818

Capital goods

−0.042

1

0.973

Appendix 3.39: ANOVA of the consolidated sample and the constituent sectors of the sample companies based on interest coverage ratio over phase 1 (2001–2006) and phase 2 (2007–2011) and phase 3 (2007–2008) and phase 4 (2009–2011)

Paired samples t-tes t of constituent sectors of the sample companies based on total external obligations coverage ratio over phase 3 (2007–2008) and phase 4 (2009–2011)

Sector

Phase 3 and Phase 4

t

df

Significance (2-tailed)

Metals

2.436

17

0.026

Housing

2.413

17

0.027

Transport

1.914

17

0.073

Capital goods

1.280

12

0.225

Diversified

−1.244

8

0.249

Miscellaneous

−1.093

15

0.292

Healthcare

−0.924

13

0.373

Oil and gas

0.916

11

0.379

ICT

0.878

17

0.392

Power

0.815

10

0.434

FMCG

−0.664

11

0.520

Appendix 3.42: ANOVA of the consolidated sample and the constituent sectors of the sample companies based on total external obligations coverage ratio over phase 1 (2001–2006) and phase 2 (2007–2011) and phase 3 (2007–2008) and phase 4 (2009–2011)